FOREST GROVE, Ore. — Mergers of large equals may be grabbing headlines, but boards should think twice before signing on the dotted line, said Merger Solutions Group President David Bartoo.
Bartoo cautioned against a rush to meet the $1 billion sweet spot, saying credit unions must first demonstrate mergers will provide both tangible and intangible benefits for members and the credit union industry.
Speaking of the proposed merger between Visterra Credit Union and Credit Union of Southern California, Bartoo said both institutions have strong sustainability trends, multiple locations, participate in shared branching, have significant product stratification, and offer up-to-date technology to members. Because both credit unions stated they would not lay off employees, member benefit must come from other efficiency gains.
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Differences in earnings ratios between the two institutions could shortchange the stronger institution, he said.
"Visterra posts a lower interest and non-interest income percentage, as well as a higher percentage of interest paid. Depending on the strategic plan for the merged credit unions, these could be unbalanced numbers in determining mutual member benefit," Bartoo said.
However, Credit Union of Southern California CEO Dave Gunderson said if approved, the merger will not only result in better rates for members of both institutions, it will also pay for an expansion to offer business services, too.
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